An economic analysis of publicly funded vegetable research in South Africa from 1980 to 2012

Abstract:

Public investment in agricultural research has been declining in inflation-adjusted terms over the years in South Africa. This has created a need to evaluate agricultural research and provide evidence of the benefits derived from agricultural research investments. Economic evaluations of agricultural research have been conducted in South Africa and have shown positive returns to agricultural research investments. The studies have been conducted at national, enterprise, institute, crop and project levels. Similar evaluation studies have also been conducted specifically for research conducted by the Agricultural Research Council (ARC) of South Africa, the principal public research organization in the country. These studies were focused on grain, livestock, deciduous fruit and some ornamental plants research.
With the exception of sweet potato research, the economic returns to vegetable research have not yet been estimated in South Africa and as such, the returns to vegetable research, at national, crop or institute levels are not yet known. This study therefore aims to conduct an economic analysis of vegetable research for the period 1980 to 2012. The analysis focused on publicly funded vegetable research in South Africa and included evaluating the contribution of Agricultural Research Council’s Vegetable and Ornamental Plant Institute (ARC-VOPI) to vegetable cultivars developed over the years, evaluating the trend in public vegetable research investments over the period 1980 to 2012 and estimating the marginal internal rate of return to vegetable research. A Plant Breeders’ Rights analysis was conducted to evaluate ARC-VOPI’s contribution to vegetable cultivars developed over the years. This involved analysing the ownership of registered cultivars among 14 selected commercial vegetables as recorded in the South African Plant Variety Journal from 1966 until 2013.
The analysis revealed that 41 percent of the registered commercial vegetable cultivars over that period were owned by foreign companies and 37 percent of the cultivars were owned by domestic private companies. The public sector only accounted for 17 percent of the cultivars and this was concentrated in four vegetable commodities, two of which were bred by ARC-VOPI, i.e. sweet potatoes and potatoes.
The relatively low involvement of ARC-VOPI in the breeding of vegetables was due to, among other reasons, the general decline in vegetable research investments over the years. The institute went from investing about R15 million in inflation-adjusted 2010 values in vegetable research in the 1980s to about R5 million in 2012. The decline particularly occurred from the early 1990s when changes in funding policy were introduced, not only at the institute but within the ARC as a whole. In addition, the mandate to service resource-poor agriculture given to the institute in the early 1990s resulted in 20 percent of the institute’s funds being redistributed to this sector alone.
The marginal internal rate of return to public vegetable research investments was estimated to be 39 percent. This rate of return implies that a R100 increase in vegetable research yields marginal gains of R39 to the vegetable industry. The rate of return was estimated using an ex-post production function with a polynomial distribution lag. This rate of return is significant and consistent with findings in previous studies which estimated rates of return of between 40 percent and 78 percent for other ARC institutes, thus providing justification for increasing investments in vegetable research.